JD WETHERSPOON PLC. Preliminary Results September 2007

Transcription

1 JD WETHERSPOON PLC Preliminary Results September 2007

2 Highlights Year to 29 July 2007 Reported Excluding 53 Results week last year* Turnover 888.5m +5% +7% Operating profit 91.1m +9% +12% Profit before tax 62.0m +6% +9% Earnings per share 28.1p** +17% +20% Free cash flow per share 35.6p (2006: 42.1p) Dividend per share 12.0p (2006: 4.7p) *Growth on a 52 week basis excluding benefit of 53 rd week last year **Excludes one-off tax credit 2

3 Average Sales Per Pub Week (including VAT) % compound growth over last 5 years. 3

4 Like for Like Sales/Profits % Bar (1.4) Food Machines 2.7 (1.4) (2.4) Total LFL Sales (0.6) LFL Profits (4.0) (0.7) (0.9) 4

5 Operating Margin - Summary % of Sales 000 % of Sales Turnover 888, ,516 - Pub Operating Profit 172, , Head Office Costs (35,207) (4.0) (32,860) (3.9) Share Incentive Plan (3,086) (0.3) (2,480) (0.3) Depreciation (43,946) (4.9) (43,393) (5.1) Gain on disposal 1, Impairment provision (876) Operating Profit 91, , Modest improvement in operating margin 5

6 Pub Operating Margin Gross margin improvement Wages - p ay rates - bonus payments Operating costs - utilities (+ 7.5m) - rent costs encouraging Increase of 30 basis points (100 basis points excluding utilities) 6

7 Non-Smoking - Scotland Sales: First Month April 2006 Q4 FY 2006 H1 FY 2007 Full Year FY Total Bar Food Machines LFL pub profit * +7.1* *includes impact of utilities Encouraging recovery after initial dip 7

8 Non-smoking Wales & Northern Ireland Bar Food Machines Total Wales Northern Ireland Strong performance on food sales 8

9 Non-Smoking Post July 1st Total Company LFL Sales Bar Food Machines Total July +1.3% +24.8% +9.1% +5.3% August -3.2% +12.5% -1.2% +1.1% Following initial trends seen in Scotland? 9

10 Cash Flow Cash from operations 124, ,366 Interest and tax (47,020) (37,963) Re-financing costs - (1,412) Investment in existing pubs (24,046) (20,810) Investment in own shares (SIP) (1,488) (3,469) Free cash flow 52,379 69,712 Dividends (10,295) (7,367) Disposal proceeds 4,768 4,645 Investments in new pubs (51,951) (16,766) Cash flow before share capital changes (5,099) 50,224 Share buybacks (77,015) (78,683) Issue of new shares 5,927 6,974 Movement in net debt (76,187) (21,485) Free cash flow per share 35.6p 42.1p 10

11 Capital Expenditure Total 86.7m 2007 openings 31.6m 2008 openings 26.3m Re-investment 28.8m Re-investment 28.8m 6.8m non-smoking 4.2m refurbishments 16.1m fixtures and fittings 1.7m head office 11

12 Dividends In line with previous statement 12.0p full year (2006: 4.7p) Dividend cover 2.3* *Normalised EPS excluding tax credit 12

13 Allocation of Resources 162m 116m 130m 124m 92m Dividends Buybacks Capex Last 5 years 319m invested in pubs 305m return to shareholders 13

14 Financial - Funding Net debt/ EBITDA Interest cover (times) Fixed charge cover (times) - statutory excluding depreciation

15 Banking Facilities UK banking facility 415m Matures December participating lenders US private placement $140m - 87m Matures September 2009 Fully hedged Total facilities 522m (including overdraft) Interest rate hedging 150m (July 2009) 15

16 Property Monitor opportunities / developments Currently 42% freehold Current market uncertainty 16

17 ROC/CROCCE/ROE P&L return on capital 11.7%* 11.1% Crocce 12.2% 12.0% P&L return on equity 20.2%* 16.5% Cash return on equity 15.5% 14.8% *Excludes one-off deferred tax credit Detailed calculations in appendix D 17

18 Trading Performance Record weekly sales per pub Modest margin improvement Uncertainty regarding non-smoking 18

19 Stanley Jefferson 19

20 The Bishop s Mill 20

21 Marketing - Spirits 21

22 Marketing 22

23 Marketing 23

24 Developing Product Mix Machines 5% Machines 7% Machines 6% Food 17% Food 21% Food 27% Bar 76% Bar 73% Bar 68% 1997 (Sales 139m) 2002 (Sales 601m) 2007 (Sales 888m) Food sales per week up to 8.2k from 3.3k over 10 years 24

25 Real Ale The biggest beer and wine festivals in the world 1.6m pints of real ale in 14 days and 1.3m glasses of wine in 14 days. JDW continues to support local brewers with over 400 regularly supplying to JDW pubs. 25

26 On Trade Comparisons Total on trade wine sales (AC Nielsen): +3% to May 2007 JD Wetherspoon wine sales +9.4% Real ale sales (AC Nielsen Jan 2007): Decline of 3% JD Wetherspoon real ale sales +10.8% Soft drinks represents 15.3% of JDW bar sales Food/soft drinks/coffee around 50% of sales. 26

27 The Environment Recycling cooking oil into Bio Diesel Scottish deliveries transported from Daventry by train. Pub recycling has exceeded 11,000 tonnes in 3 years. Pilot glass recycling scheme - Government backing to extend to all pubs. Distribution centre carbon neutral in 12 months. Melton Mowbray Green pub opening this month. 27

28 Bio Diesel Truck and Train 28

29 Bonus Payments 19m paid in year on staff bonus plus free shares. Pub managers 29% / assistant managers 16% / staff 11%* Single pub manager average remuneration 42,000** Overall JDW 15% pay-out* John Lewis 18% pay-out*** * Average % of salary paid in bonus and free shares. ** Includes basic pay plus bonus plus free shares plus accommodation. *** As per John Lewis 2007 accounts. 29

30 JDW Did you know? Fetzer is twice the size of Blossom Hill in the managed ontrade. JD Wetherspoon are Lavazza s biggest single customer. Over 650 pubs - 90 per cent of the estate Cask Marque accredited. 119 pubs listed in CAMRAs Good Beer Guide Worlds biggest seller of Kopparberg cider, outselling the whole of the Swedish home market. JD Wetherspoon is the biggest seller of Pimms in the world. The No.1 fund raiser for CLIC Sargent ( 2 million target). Times Top 100 employer for the 5th year running 30

31 Pipeline 10 on site 13 permissions in place 43 deals agreed subject to permits 131 in negotiation 197 total pipeline 31

32 2008 Considerations Non-smoking impact on sales Food sales mix 30% already Minimum wage +3% (October 2007) Utilities benefit circa 5m Increasing interest rates 32

33 Current Trading and Outlook August total Company sales +3.6% (LFL +1.1%) Short-term uncertainties Long term non-smoking beneficial to industry Strong pipeline / investment opportunities pubs still the target Confident of longer term prospects 33

34 Appendices A - 10 Year Financial Graphs B - 10 Year Trends C - Capital Trends D - ROC/CROCCE/ROE Calculations 34

35 10 Year Summary Number of Pubs Appendix A Average Sales Per Pub Week (including VAT) Turnover millions millions Profit Before Tax

36 JDW - Financial Trends Appendix B Sales per pub ( 000) ,004 1,040 1,093 1,169 1,239 1,246 1,283 1,354 EBITDA per pub ( 000) (1) Number of pubs % freeholds (%) CROCCE (%) (2) Cash return on equity (%) (2) Free cash flow per share (pence) (1) Excluding sale & leaseback (2) See appendix D for calculation 36

37 Capital Trends Appendix C Size (sq.ft.) openings 3,037 3,217 3,713 3,808 3,721 4,317 4,176 3,637 3,855 Number of openings % which are freehold Freehold average cost ( k) Average development cost ( k) 941 1,049 1,178 1,262 1,317 1,431 1,401 1,301 1,520 Average cost per sq. ft Increase in average cost (%) Population within 2 miles 70,000 77,000 70,000 70,000 73,000 51,000 64,000 59,000 45,000 Pub openings with beer gardens (%) * *excluding 2 airport sites 37

38 ROC/CROCCE/ROE Appendix D Profit after tax 46,834 39,901 Less: deferred tax credit 5,472 - Underlying PAT (e) 41,362 39,901 Add: interest (f) 29,089 25,228 Profit pre-interest (g) 70,451 65,129 Add: deferred tax 2, Depreciation 43,946 43,393 Cash return (h) 116, ,944 P&L return on capital [(g)/average (c)] 11.7% 11.1% CROCCE [(h)/average (d)] 12.2% 12.0% P&L return on equity [(e)/average (a)] 20.2% 16.5% Cash return on equity [(h)-(f)/average (d)-(b)] 15.5% 14.8% 38

39 ROC/CROCCE/ROE Appendix D Shareholder funds per balance sheet 172, ,575 Add: cum losses on disposal 13,884 13,884 : hedging provision 1,318 7,151 (a) 187, ,610 Add: net debt (b) 433, ,630 Capital employed (c) 621, ,240 Add: deferred tax provision 79,400 82,958 Less: deferred tax asset (975) (3,030) Cumulative depreciation 321, ,497 Less: revaluation reserve (22,554) (22,554) Cash capital employed (d) 998, ,111 39